The company's performance has maintained steady growth, and the hematopoietic capacity of the stock assets is stable. The company released the mid-year report of 2023, with operating income of 34.80 yuan (year-on-year + 10.1%) and net profit of 847 million yuan (+ 1.0%) in the first half of the year. The company's 2023H1 gross profit margin, parent net profit margin and weighted ROE are 41.6%, 24.3% and 5.6%. In addition, the company's 2023H1 achieved a net operating cash flow of 879 million yuan, and the hematopoietic capacity of the stock assets was stable. The asset-liability ratio is relatively stable, at 58.9% as of 2023H1.
Water still contributes the main force to profits, and solid waste profitability increases steadily. According to the mid-report of 2023, as of 2023H1, the production capacity of hand sewage treatment and tap water has exceeded 4.6 million tons / day, waste incineration capacity has reached 14,400 tons / day, and kitchen waste disposal capacity has reached 1750 tons / day. 2023H1 sewage treatment and tap water business achieved a gross profit of 4.66 yuan and 549 million yuan, accounting for 70% of the total gross profit. Water business is still the main force contributing to the company's profits. In addition, the gross profit margin of 2023H1 waste incineration power generation increased by 5.5pct to 42.2% compared with the same period last year, and the dual driving effect of "water + solid waste" is gradually becoming clear.
Actively expand the second and third circle market in Chengdu, equity incentives demonstrate the determination of development. August 24 announced the establishment of a joint venture with Chengdu Xiling Wen Lu Group to cooperate on the water supply and drainage business in Dayi County. The company holds 51% of the shares and the registered capital of the joint venture company is 500 million yuan. The company is actively expanding the second and third layers of Chengdu water environmental protection market, which is expected to further enhance the company's sewage treatment scale and market share in Chengdu. According to the announcement of the company's equity incentive plan in 2022, the assessment target is 2023max 2024 revenue of RMB80,000,000,000 and EPS of RMB0.59 per share, demonstrating confidence in development.
Profit forecast and investment advice: we expect the company's return net profit from 2023 to 2025 to be 1.973 billion yuan, corresponding to a PE of 9.23 8.08 billion. The company is a water leader, the existing operating projects are profitable, and with the help of the industry Dongfeng to actively expand environmental protection business, equity incentive goals demonstrate development determination. With reference to the company's growth and interbank valuation, the company is valued at 12 times PE in 2023, with a reasonable value of 6.95 yuan per share and maintaining a "buy" rating.
Risk hint. The release of production capacity fell short of expectations, interest rates rose, and the progress of remote expansion was not as expected.